Global stocks extend its decline amid Italian crisis and disappointing earnings

Chris L
Category:  Financial News
Stocks in Europe and America performed negatively on Tuesday as investors are worried about the political turmoil between the European Union and Italy and disappointing earnings reports in the United States.

The European Commission affirmed on Tuesday that Italy's draft budget plan requires substantial adjustment and in this framework, it is rejecting the proposal. Italian bonds reacted to the upside. 

Previously, Rome presented a plan that includes a budget deficit of 2.4% of GDP in 2019. The previous Italian administration committed with the European Union for a deficit of 0.8% of GDP. It is the first time the European Commission rejects a draft budget proposal by a member country. 

European stocks market closed Tuesday with significant loses amid the Italian crisis. The EuroStoxx 600 closed 1.5% down at its lower levels since December 2016. Dax collapsed 2.17% on the day to finish at 11,274.28. The CAC declined 1.69% or 85.62 points to 4,967.69; while the FTSE 100 dropped 1.24% to 6,955.21. 

In America, major indexes are reporting significant losses as investors are digesting disappointing earnings reports from Caterpillar and 3M. The S&P 500 is performing its twelfth negative day in the last fourteen, and its fifth straight weekly decline. 

JJ Kinahan, chief market strategist at TD Ameritrade, stated earlier this morning that "trade tensions appear to continue to be a dominant worry among market participants, and that was underscored after Caterpillar (CAT) blamed tariffs for helping to push up its manufacturing costs. Italian budget worries and tensions surrounding Saudi Arabia also appeared to darken the mood."

The Dow Jones Industrial Average is falling 1.24% on Tuesday as the index is 313.45 points down at 25,003.96. On the last five trading days, the DJIA is 3.10% down. The S&P500 is also down sharply today as the index is 1.34% negative at 2,719.00. The S&P is 3.18% red on the last five trading days.

The NASDAQ Composite is trading 1.30% down at 7,371. In the last five trading days, the Composite is 3.34% negative. 

By industries, the majority of sectors are in negative territory along major indexes. The only three winners of the day are the consumer discretionary with 0.44% gains on the day. Followed by real estate which is 0.27% up and information technology with 0.05% gains. 

Big losers are the energy sector with a 1.80% decline, followed by the communication services, 0.95% down, and utilities, which is 0.88% down on Tuesday. 
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